How much will a Windows 7 migration really cost?

Last week, the Gartner Group made some headlines with a provocative press release that tried to pin a price tag on the cost of migrating to Windows 7. After reading the full report, I've come up with a slightly different set of conclusions. The short version? The biggest losers are those who bought into the "Save XP" movement, who'll be paying a hefty "XP diehard tax." I've got the details.

Last week, the Gartner Group made some headlines (including this one from my ZDNet colleague Mary Jo Foley) with a provocative press release that tried to pin a price tag on the cost of migrating to Windows 7. The press release throws out four separate price tags, ranging from $1,205 to $2,069 per PC, with some confusing percentages to quantify overall IT budget increases. But in their zeal to come up with hard numbers, the press release adds more confusion than clarification to the topic. In some cases, the numbers just don't add up.

Gartner was kind enough to provide me with a copy of the full report. After reading it over, I've come up with a slightly different set of conclusions. The executive summary? If you run a Windows shop and you've been paying attention to the Windows landscape for the past two or three years, you've got few surprises in store, and Gartner's alarming numbers don't apply to you. But if you pinned all your hopes on the "Save XP" movement, you've got some serious catching up to do, and your migration bill is likely to be much higher than it would have been otherwise.

Here are the places where I agree and disagree with the Gartner study.

Yes, it's an important issue.

According to analyst Charles Smulders, Gartner estimates that large and midsize organizations will migrate approximately 250 million PCs from Windows XP to Windows 7 in the next two or three years. That sounds about right to me, and is certainly in line withsome of the projections I've seen lately. And staying on XP is not an option—at least not for any workstation that is actually connected to the Internet.

Your migration away from XP should be in the final stages by early 2013.

I agree with Gartner completely on this point. Support for Windows XP ends formally in April 2014, but third-party software companies will probably be phasing out their support during 2013. In addition, it is prudent to allow some slack in the schedule for things to go wrong, as they always do. In the timeline that accompanies the Gartner report, 2013 and 2014 are colored bright red and labeled the "XP Danger Zone."

To hit that 2013 deadline, your migration had better be under way now.

Absolutely right. If your IT operation rolls like a well-oiled machine, you've already begun deploying Windows 7 on a three- or four-year cycle that will have XP completely off your network in plenty of time for the April 2014 deadline. Gartner assumes PC hardware replacement cycles of 3.25 years for a notebook and a little less than five years for a desktop. If you're buying new PCs today expecting them to last four years, they'd better be starting with Windows 7 and not with XP.

What might not have been clear in those Gartner numbers that were so widely reported is that they include the capital costs of new PCs and Windows licenses. According to my calculations, Gartner is pegging the cost of a new PC with a Windows 7 Professional license at somewhere between $723 and $1,199. PCs are depreciable assets, so those costs aren't optional, although their timing is.

So, what happens if you haven't already started a migration?

If you're just beginning to realize that you're behind in your migration planning, then Gartner's warnings definitely apply to you. Let's call it the "XP diehard tax," which Gartner says you'll pay in one of two ways:

Accelerated PC replacement. Gartner's calculations assume the average enterprise with 10,000 PCs will need to replace roughly 25% of its machines early. In that case, you'll be prematurely throwing out perfectly good PCs before their useful life has run out, meaning you'll be paying a "migration tax" equal to 25% of the average cost of a PC, or about $180-$300 per PC.

Upgrades for installed PCs. This one hurts for two reasons. First, you have to pay $150-$200 for a Windows 7 upgrade license, and you have to pay for the parts and labor to upgrade memory, hard disk, and/or video adapters on desktop PCs that you choose not to replace. That's a terrible ROI.

That sounds about right. If your natural hardware replacement cycle is disrupted, you pay extra. Where Gartner loses me in the discussion is with the numbers in the full report, which simply don't add up. According to the report, those upgrade costs (including the Windows license) equal more than $1,600 per PC, which is double the cost of a new PC. I suspect it's a typo, and I've sent an e-mail to Gartner asking for clarification. I'll update this post when I hear back.

Update September 9: It took a while, but Gartner's Charles Smulders finally got back to me. As I suspected, that number is not accurate. The correct figure they used to calculate the cost of an upgrade is $835, which is only a few hundred dollars less than the cost of a maxed-out new PC with a Windows 7 Professional license.

A few big qualifications are buried in the fine print of that Gartner report, and a couple aren't mentioned at all.

If you bought smart, you don't need to upgrade hardware. Specs for Windows 7 are equal to or less than those for Windows Vista. So if you bought a Vista-ready machine in 2007 through 2009, it shouldn't need any hardware upgrades to handle an OS upgrade. The losers here are IT buyers who bought cheap PCs and now need to crack them open. That was a false economy. If you bought PCs with an eye to the future, you've already got the hardware you need.

If you have a Software Assurance contract, you've already paid for Windows 7 licenses. Gartner notes this detail in passing, but that detail shaves $150-200 off their cost estimates.

Investments in deployment technology can have huge payoff. Many of the Gartner numbers seem to be predicated on the idea that an IT worker has to touch each PC and do a manual upgrade. But as the report's authors note, smart enterprises have already eliminated the need for those manual interventions, and the savings are staggering: "[M]igration costs can be reduced significantly by investment in zero-touch PC deployment processes and tools. Gartner estimates that in the best case, an in-place upgrade can be done for $100 per PC or less…"

PCs running Windows Vista don't need accelerated upgrades. For some reason, Gartner completely ignored enterprises that have already completed app compatibility testing and have begun a migration from XP to Windows Vista. Those PCs don't face the same 2014 upgrade deadline as their XP counterparts. An IT administrator who has moved 25% or more of the enterprise desktops to Vista can comfortably switch to Windows 7, avoid the XP Danger Zone, and avoid all those early upgrades and replacement.

This is a tremendous opportunity for desktop virtualization. Gartner notes the potential for server-based computing and hosted virtual desktops but doesn't calculate the potential savings. I suspect a lot of organizations will accelerate their plans for replacing PCs with cheaper, more centralized options, especially for task workers.

So, what's the overall impact on IT budgets?

In her headline, Mary Jo Foley called out the most alarming number from the Gartner report: IT shops moving to Windows 7 need a 20 to 60 percent PC budget increase. But as the report makes clear, the PC budget typically represents only 15% of a typical IT budget, which means that a 20-60% increase in the PC budget actually represents an overall increase of only 3% (best case, according to Gartner) or 9% (worst case). And given the numbers I calculated, companies that began planning for migration three years ago and invested in advanced deployment tools could actually see their PC costs drop, percentage-wise, during the course of this migration. Imagine that.

Thank You

By registering you become a member of the CBS Interactive family of sites and you have read and agree to the Terms of Use, Privacy Policy and Video Services Policy. You agree to receive updates, alerts and promotions from CBS and that CBS may share information about you with our marketing partners so that they may contact you by email or otherwise about their products or services.
You will also receive a complimentary subscription to the ZDNet's Tech Update Today and ZDNet Announcement newsletters. You may unsubscribe from these newsletters at any time.